By Rodrigo Campos
(Reuters) - The S&P 500 tumbled to a more than six-month low on Thursday, closing in negative territory for the year, on concern a decelerating Chinese economy will translate into slower global growth.
Consumer stocks led the decline on Wall Street with Disney down 6 percent after a brokerage downgrade, while Apple fell 2 percent after a report that overall smartphone sales in China fell in the second quarter.
Concern about the Chinese economy was underscored by a near 8 percent slide in the Shanghai stock index (.SSEC) so far this week and after the Commerce Ministry said Wednesday exports could continue falling in coming months.
"The largest issue is certainly the fact that we don't know how much the Chinese economy is slowing," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
"That's manifesting itself in lower oil prices," he said, pointing to the correlation between stocks and crude futures.
U.S. crude (CLc1) edged higher after earlier hitting its lowest since March 2009, while Brent (LCOc1) dropped 2.3 percent to its lowest since January.
The 14-day correlation between the S&P 500 and Brent prices is at a five-month high.
The Dow Jones industrial average (.DJI) fell 358.04 points, or 2.06 percent, to 16,990.69, the S&P 500 (.SPX) lost 43.88 points, or 2.11 percent, to 2,035.73 and the Nasdaq Composite (.IXIC) dropped 141.56 points, or 2.82 percent, to 4,877.49.
The drops in the S&P 500 and Dow were the largest daily percentage declines since Feb. 3, 2014, while the Nasdaq fell the most since April 10, 2014.
The S&P 500 is now down 1.1 percent year-to-date. It also traded below its 200-day moving average for the full session, for the first time since last October.
At its session low on Thursday, the S&P 500 was down 4.6 percent from its record intraday high set in late May.
"We've had a lot of things go wrong today both fundamentally and technically. Fundamentally, there's continued concern about global growth slowing and weakness in the price of oil. The market was unable to hold the 200-day moving average from a technical standpoint," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama
"For tomorrow, ideally we could see some stabilization and a move back toward the 200-day moving average. The risk is if there's something that investors don't like, it will be really easy to sell going into the weekend."
The CBOE Volatility index (.VIX) rose 25.5 percent to close at 19.14, the highest in six weeks, as traders paid more for protection against a further slide in the S&P 500.
Disney (DIS.N) slumped 6 percent to $100.02 and Time Warner (TWX.N) fell 5 percent to $73.90, leading a rout in media stocks after a Bernstein downgrade that cited a massive structural upheaval in the industry.
"The pattern didn't change overnight, but it got called by Disney for the first time on their earnings," said Hogan.
Disney shares have fallen 17.8 percent since the company reported earnings earlier this month.
Apple (AAPL.O) fell 2.1 percent to $112.65 after a Gartner report said China smartphone sales fell in the second quarter for the first time ever on a quarterly basis. Apple counts China as a key growth market.
One bright spot in tech stocks was NetApp (NTAP.O), up 3.4 percent to $30.78 after the data storage equipment maker's results beat expectations.
NYSE declining issues outnumbered advancers 2,612 to 457, a 5.72-to-1 ratio; on the Nasdaq, 2,396 issues fell and 437 advanced, for a 5.48-to-1 ratio favouring decliners.
The S&P 500 had four new 52-week highs and 40 new lows; the Nasdaq Composite had 16 new highs and 208 new lows.
About 8 billion shares changed hands on U.S. exchanges, above the 6.7 billion daily average so far this month, according to BATS Global Markets data.
(Reporting by Rodrigo Campos, additional reporting by Caroline Valetkevitch; Editing by Nick Zieminski and Steve Orlofsky)